The UK will finalize its cryptocurrency legal framework by 2026 and launch it from October 2027, prioritizing consumer protection and eliminating malpractice from the market.
The new bill, to be presented to parliament on December 15th, builds upon the earlier draft and makes only minor revisions, expanding existing financial regulations to include cryptocurrencies. According to the Treasury Department, the new framework prioritizes compatibility with US law over the EU's MiCA.
- The UK's crypto legal framework will be finalized in 2026 and implemented from October 2027.
- The direction aligns with US law, expanding financial regulation to include crypto.
- Stablecoins are subject to holding limits and interest-bearing restrictions; DeFi enjoys tax advantages.
The UK will finalize its crypto legal framework by 2026 and implement it from October 2027.
The UK's crypto regulatory framework is expected to be finalized in 2026 and come into effect in October 2027, aiming to increase consumer protection and eliminate malicious actors.
“Provide clear rules of the road, strengthen consumer protections, and keep dodgy actors out of the market.”
– Rachel Reeves, UK Chancellor of the Exchequer, Reuters/2025
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The bill, which will be introduced on December 15, is based on a draft published earlier this year. The Treasury Department said there will be only minor adjustments and it will expand the current financial regulatory framework to cover digital assets. The approach aims to be compatible with the US framework rather than the EU's MiCA.
The legislative and consultation process is being implemented in stages.
From October 2023, the UK opened proposals for regulating crypto and stablecoins, with public consultation until May 2025; draft guidance led by the BoE and FCA will be published in Q4 2025; feedback will be finalized in H2 2026; the new framework will be operational in 2027.
In October 2023, a set of proposed regulations for crypto and stablecoins was released. The government supports rules on stablecoin issuance, exchange operations, and disclosure standards to reduce market abuse.
The public consultation period will last until May 2025. From May to July 2025, the regulatory authority will continue to gather in-depth feedback on stablecoins and hold additional consultation sessions focusing on disclosure and oversight standards.
In Q4/2025, the Bank of England (BoE) and the Financial Conduct Authority (FCA) released draft guidance covering stablecoins, DeFi , and other crypto segments, creating a framework for gathering feedback to finalize regulations in the second half of 2026.
UK stablecoin regulations impose holding limits and interest-bearing restrictions.
Individuals are allowed to hold a maximum of £20,000 per “system stablecoin”; businesses a maximum of £10 million. Only 60% of reserves are permitted to earn interest from short-term UK government bills.
The UK's stablecoin framework is described as mirroring the US GENIUS Act but with stricter caps to limit the risk of Capital outflow from the traditional system. In contrast, the US does not impose holding caps; issuers can earn interest up to 100% of their reserves through T-bills, although interest-bearing stablecoins remain controversial.
Some critics, such as AAVE CEO Stani Kulechov, argue that the strict interest rate cap could make GBP Peg stablecoins less competitive. He also positively assesses other UK incentives.
DeFi and digital asset diversification offer a competitive advantage.
He advocated for tax exemptions for DeFi lending/ Staking activities and considered Bitcoin and other digital assets as privately owned assets, receiving widespread support from the industry.
New guidelines, such as tax exemptions for DeFi, are seen by the community as a "plus" that promotes legitimate activity, reduces tax overlaps, and creates a transparent playing field for decentralized finance products. Classifying crypto as an asset strengthens the legal foundation for protecting ownership rights and resolving disputes.
Expected impact on the exchange, issuer, and investors.
Clear regulations will increase disclosure and oversight requirements for exchanges and issuers; users will benefit from consumer protection, while high-risk models and malicious actors will be eliminated.
With an implementation timeline starting in October 2027, businesses have time to adjust their compliance systems, stablecoin reserve management, and transparency standards. Compatibility with the US framework is expected to reduce regulatory Shard , facilitate cross-border operations, and enable the listing of compliant crypto products.
Frequently Asked Questions
When will the UK's crypto regulatory framework come into effect?
The legal framework is expected to be completed in 2026 and come into effect from October 2027, after the completion of consultations, issuance of guidelines, and preparation for implementation.
How much stablecoin does Tran hold in the UK?
Individuals can hold a maximum of £20,000 per "system stablecoin," while businesses can hold a maximum of £10 million. A maximum of 60% of reserves can earn interest from short-term UK government bills.
Will he align his crypto framework with the US or the EU's MiCA?
The Treasury Department said the new framework would lean more toward compatibility with US law than with the European Union's MiCA.
